Pledge and Lien STUDIES IN SCOTS LAW Series Editor Kenneth G C Reid Editorial Board Alan R Barr Sandra M Eden George L Gretton Previous volumes in the Series 1. Ross Gilbert Anderson, Assignation (2008) STUDIES IN SCOTS LAW VOLUME 2 Pledge and Lien Andrew J M Steven Lecturer in Law, University of Edinburgh EDINBURGH LEGAL EDUCATION TRUST 2008 Published by Edinburgh Legal Education Trust School of Law University of Edinburgh Old College South Bridge Edinburgh EH8 9YL First published 2008 © A J M Steven 2008 The author asserts his moral rights. ISBN 978-0-9556332-1-8 British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the written permission of the copyright owner. Applications for the copyright owner’s permission to reproduce any part of this publication should be addressed to the publisher. Typeset by Etica Press Ltd, Malvern Printed and bound by Bell & Bain Ltd, Glasgow Contents Preface vii Table of Cases ix Table of Statutes xxiii Table of Statutory Instruments xxvii Abbreviations xxix 1 General 1 2 Pledge: Introduction 5 3 History of Pledge 15 4 Pledge: The Obligation Secured 45 5 Subject Matter of Pledge 57 6 Constitution of Pledge 63 7 Pledge: Rights and Duties of the Parties 89 8 Enforcement and Extinction of Pledge 95 9 Lien: Introduction 107 10 History of Lien 113 11 Lien: The Obligation Secured 161 12 Subject Matter of Lien 171 13 The Pre-Requisites of Lien 177 14 Lien as a Real Right 195 15 Enforcement and Extinction of Lien 203 16 Special Lien 209 17 General Lien 247 18 Pledge and Lien Compared 281 Index 287 v Preface This book is an updated and restructured version of my doctoral thesis. It was submitted to the University of Edinburgh in 1997 and the doctorate awarded in 1998. Some of the thesis has been used heavily in my chapter on ‘Rights in Security over Moveables’ in Kenneth Reid and Reinhard Zimmermann (eds), A History of Private Law in Scotland (2000) volume 1, and in my chapter with Gerrit Pienaar on ‘Rights in Security’ in Reinhard Zimmermann, Daniel Visser and Kenneth Reid (eds), Mixed Legal Systems in Comparative Perspective: Property and Obligations in Scotland and South Africa (2004). Much of it, however, has remained unpublished, but has been referred to in a number of works, notably David Carey Miller with David Irvine, Corporeal Moveables in Scots Law (2nd edn, 2005). I was therefore pleased to accept the invitation of the series editor to publish it in Studies in Scots Law. There have been no reported cases on pledge in Scotland since 1997 and only a few on lien. Other developments, such as human rights legislation and more academic literature, nevertheless, have necessitated substantive updating of the text. I have also taken the opportunity to reflect further on the more difficult areas and in some places have revised my views. It remains my opinion that there is much room for development in the law of lien. Moreover, the current ‘credit crunch’ has apparently significantly boosted business for pawnbrokers, so we may yet see pledge being litigated again. My primary debt of gratitude is owed to Professor Kenneth Reid and Professor George Gretton, my supervisors between 1994 and 1997, for their help and inspiration, then and since. I am also grateful to Professor John Murray and Professor David Carey Miller, my examiners, for their helpful comments. I acknowledge also the kind assistance of Dr Ross Anderson, Margaret Cherry, David Irvine, Professor Duard Kleyn, Professor Hector MacQueen, Professor Roderick Paisley, Professor Gerrit Pienaar, Alison Struthers, Professor Niall Whitty, Scott Wortley and the librarians at the University of Edinburgh Law Library. Finally, I thank my family for all their support. This book is dedicated to the memory of my grandparents. Andrew J M Steven Edinburgh July 2008 vii Table of Cases References are to paragraph numbers Aberdeen & Smith v Paterson (1812) Hume 127 . 17-16 Aberdeen Trades Council v Shipconstructors & Shipwrights Association 1949 SC (HL) 45 . 11-20 Abermarle Supply Co Ltd v Hind & Co Ltd [1928] 1 KB 307 . 13-32 ABSA Bank t/a Bankfin v Stander t/a CAW Paneelkloppers 1998 (1) SA 939 (C) . 13-46, 14-15 Acme Machine Co v Scanlan (1887) 3 Sh Ct Rep 148 . 6-43, 6-47 Adam & Winchester v White’s Tr (1884) 11 R 863 . 15-10 Advanced Industrial Technology Corp Ltd v Bond Street Jewellers Ltd [2006] EWCA Civ 923 . 3-85, 6-51 Advice Centre for Mortgages Ltd (The) v McNicoll 2006 SLT 591, 2006 SCLR 602, 2006 Hous LR 22 . 6-70 Air and General Finance Ltd v RYB Marine Ltd [2007] CSOH 177, 2007 GWD 35-589 . 9-12, 13-28, 13-35, 14-06, 16-23, 16-57, 16-72, 18-02 Albatown Ltd v Credential Group Ltd 2001 GWD 27-1102 . 11-01 Allan v Allan & Co (1831) 9 S 519 . 17-37 Allan v Sawers (1842) 4 D 1356 . 17-89 Allan’s Trs v Lord Advocate 1971 SC (HL) 45, 1971 SLT 62 sub nom Allan’s Trs v Inland Revenue Commissioners . 8-26 Allen v Smith (1862) 12 CBNS 638, 142 ER 1293 . 16-100 Alston’s Tr v Royal Bank of Scotland (1893) 20 R 887 . 4-08, 4-14 Anderson v Dickie 1915 SC (HL) 79 . 10-142 Anderson’s Trs v Fleming (1871) 9 M 718 . 9-10, 10-141, 12-01, 13-03, 16-09, 17-14, 17-17, 17-22 Angus v McLachlan (1883) 23 Ch D 330 . 16-100 Anon (1693) 2 Salk 522, 91 ER 445 . 7-09 Appine’s Creditors (1760) Mor 749 . 13-11 Armour v Thyssen Edelstahlwerke AG 1990 SLT 891 . 2-19, 3-78 Arthur v Anker [1997] QB 564, [1996] 2 WLR 602, [1996] 3 All ER 783 . 11-01 Arthur v Hastie & Jamieson (1770) Mor 14209 . 13-26 Attenborough v Solomon [1913] AC 76 . 6-35 Auld v Hall and Co 12 June 1811 FC . 6-25 Ayton v Colville (1705) Mor 6247 . 10-83, 10-84, 10-92, 12-01, 14-09, 15-11 Balleny v Raeburn and Co 7 June 1808 FC, Mor App, Compensation No 5 . 4-04, 16-06 ix Table of Cases x Bank of Lisbon and South Africa Ltd v De Ornelas 1988 (3) SA 580 (A) . 10-05 Bank of Scotland v Bank of England (1781) Mor 14121 . 10-109 Barbour v Halliday (1840) 2 D 1279 . 11-19, 11-21 Barclay v Guthrie (1887) 3 Sh Ct Rep 103 . 13-24, 13-25 Barclays Bank Ltd v Astley Industrial Trust Ltd [1970] 2 QB 527 . 12-08 Barnton Hotel Co Ltd v Cook (1899) 1 F 1190 . 13-05, 13-16, 13-19 Barr & Shearer v Cooper (1873) 11 M 651 rev’d (1875) 2 R (HL) 14 . 12-01, 13-22, 16-09 Barron v National Bank of Scotland (1852) 14 D 565 . 2-07, 5-05 Beattie v Lord Napier (1832) 9 S 639 . 11-21 Bedford (Earl of) v Lord Balmerino (1662) Mor 9135 . 10-65, 10-70 Belfast Ropework Co Ltd v Bushell [1918] 1 KB 210 . 16-40 Benton & Co v Rowan (1895) 11 Sh Ct Rep 144 . 6-44, 6-46, 6-47 Bermans and Nathans Ltd v Weibye 1983 SC 67, 1983 SLT 299 . 12-01, 13-35, 16-66, 16-67, 16-82, 16-84-16-86, 16-89, 16-101 Bevan v Waters (1828) 3 Car & P 520, 172 ER 529 . 16-11 Biggart v City of Glasgow Bank (1879) 6 R 470 . 3-79 Binning v Brotherstones (1676) Mor 13401 . 9-08, 10-65, 10-76, 10-87, 11-19, 12-04, 16-09, 18-08 Blackwood v The Other Creditors of Sir George Hamilton (1749) Mor 4898 . 6-69 Bleaden v Hancock (1829) 4 Car & P 152, 172 ER 648 . 16-11 Bloxam v Sanders (1825) 4 B & C 941, 107 ER 1309 . 10-64 Bock v Duburoro Investments (Pty) Ltd [2003] 4 All SA 103 (SCA) . 8-07 Bogle v Dunmore & Co (1787) Mor 14216 . 6-24, 13-10, 16-27, 16-52 Bold Buccleugh, The (1851) 7 Moo PCC 267, 13 ER 884 . 9-05, 10-55 Bon Accord Removals v Hainsworth 1993 GWD 28-1785 . 9-12, 12-01, 16-07, 16-29, 16-34, 16-35, 16-47, 17-19, 17-22 Borthwick v Bremner (1833) 12 S 121 . 11-16, 17-37 Boskabelle Ltd v Laird 2006 SLT 1079 . 5-01, 10-02 Bowes, In re, Earl of Strathmore v Vane (1886) 33 Ch D 586 . 17-33 Bowman v Malcolm (1843) 11 M &W 833, 152 ER 1042 . 17-20 Boyd v Drummond, Robbie & Gibson 1994 SCLR 777 . 9-08, 14-12, 15-05, 17-82, 17-87 Braithwaite v Bank of Scotland 1999 SLT 25 . 5-05 Brandao v Barnett (1846) 12 Cl & F 787, 8 ER 1622 . 10-63, 12-08, 17-30, 17-31, 17-33, 17-36 Bridges v Ewing (1836) 15 S 8 . 8-01 Brink’s Trs v SA Bank (1848) 2 M 381 . 4-17 British Linen Co v Ferrier 20 Nov 1807, unreported . 17-32 Broadwood v Granara (1854) 10 Exch 417, 156 ER 499 . 16-85 Brooklyn House Furnishers (Pty) Ltd v Knoetze and Sons 1970 (3) SA 264 (A) . 13-46 Brough’s Creditors v Jollie (1793) Mor 2585 .